ThingMagic gains $6m in new funding

ThingMagic Inc., a Cambridge developer of radio frequency identification readers, yesterday said it has lined up $6 million in new funding from networking giant Cisco Systems Inc. and MIT technologist Nicholas Negroponte, bringing its total private financing to $21 million.

The company, founded in 2000, produces a device that can read radio frequency identification, or RFID, tags on crates and shipping pallets in trucks and warehouses. The technology, embraced by Wal-Mart Stores Inc. and the Pentagon, among others, is becoming a growing force in American and global supply chains.

Tom Grant, ThingMagic's chairman and chief executive, said Cisco's backing is significant because that company's technology is being deployed by RFID networks to manage massive volumes of data. ''It's important that our reader technology and their network infrastructure play well together," Grant said.

Cisco, which has acquired about six New England networking start-ups this decade, recently resumed scouting for investments as it seeks to expand into emerging technology markets.

Grant said the participation of Negroponte, founding chairman of the MIT Media Laboratory, is welcome because of his role in the company's history. Negroponte introduced Grant, a venture investor and business adviser, to ThingMagic's founders, students at the MIT Media Lab who started the company in a Somerville garage.

Sales of RFID readers, tags, software, and infrastructure products have been growing slower than once anticipated because of high implementation costs and resistance from some suppliers. But adoption of the technology is expected to accelerate in coming years.

''The potential is huge," said Kara Romanow, research director for AMR Research in Boston. ''Not only is Wal-Mart rolling it out with its suppliers, but it's moved to other retailers and other industries."

ThingMagic, which has been profitable for the past five years but faces competition from Symbol Technologies Inc. and Intermec Technologies Corp., took its first round of venture capital last summer.

Kevin Ashton, vice president for marketing, said the funding will be plowed into product development. ''We're very focused on RFID readers for the electronic product code market," he said, referring to the emerging global standard for RFID.

The current funding round also includes a line of credit from Silicon Valley Bank. Previous investors in ThingMagic include Tudor Group and affiliated funds, Exxel Group, Inventec Appliances Corp., Morningside Technology Ventures Ltd., and Top Line Capital LLC.

Robert Weisman can be reached at weisman@globe.com.